Law regarding background checks for independent contractors, versus law for employees, can be surprisingly murky, especially as “gig economy” workers become more commonplace. While recent court decisions have held that the Fair Credit Reporting Act (FCRA) should not be applied to background checks for independent contractors, the Federal Trade Commission (FTC) firmly states that employees and independent contractors should be protected under the FCRA. Where does that leave your business?
An informative SHRM article suggests a hybrid approach to minimize your liability. While a 2011 document from the FTC seems to state that the FCRA can extend to nontraditional workers like independent contractors or freelancers, other court decisions indicate otherwise. One recent decision at the United States District Court for the Northern District of Georgia held that screening independent contractors should not trigger the requirements for a background check for employment purposes.
Should your business complete background checks on freelancers and contract workers? Absolutely! It is your responsibility to your clients and employees to screen independent contractors. While they are not technically your employees, they are working as representatives of you and your brand. That means if the contractor or freelancer you hired hurts a third party, you could be held liable and pay a steep price in and out of the courtroom. It would not be a stretch for a jury to decide that you should have known about the individual’s past and taken measures to protect your workers or the public as a result.
To find a compromise between the seemingly-conflicting precedents with FCRA reporting, we suggest a hybrid methodology. If you conduct a background check using a consumer reporting agency without notifying the contractor and make an adverse decision as a result, there is a risk of being sued. When you work with our firm, we offer separate disclosures and authorizations for your employees and your independent contractors. Depending on your unique business situation, we can also add customized language onto any FCRA forms. Our background investigation services are tailored to meet your needs and ensure that all of your processes are legally sound and limiting your liability.
James P. Randisi, President of Randisi & Associates, Inc., has since 1999 been helping employers protect their clients, workforce and reputation through implementation of employment screening and drug testing programs. This post does not constitute legal advice. Randisi & Associates, Inc. is not a law firm. Always contact competent employment legal counsel. Mr. Randisi can be contacted by phone at 410.494.0232 or Email: email@example.com or the website at randisiandassociates.com